Italy’s Eni on Standby on Russian Rubles for Gas Scheme Sources

The logo of Italian oil and gas group Eni is seen on the facade of its headquarters in Rome, Italy, December 23, 2017. REUTERS/Alessandro Bianchi/File photo

MILAN, April 28 (Reuters) – Italian energy group Eni (ENI.MI) has yet to make a decision on the payment scheme Russia has introduced to buy its gas and is awaiting clarification on whether it constitutes a sanctions breach. , three sources said Thursday.

In March, Russian President Vladimir Putin said the world’s largest natural gas producer would require countries he called hostile to pay for fuel in rubles.

Under the new Russian payment system, buyers deposit euros or dollars in an account at Gazprombank, which then converts them into rubles, places them in another account owned by the foreign buyer, and transfers the payment in Russian currency to Gazprom.

“Eni has not yet submitted any application to open an account and is waiting for the political landscape to become clearer,” said a source familiar with the matter, who asked not to be identified because the source was not authorized to speak to the press.

But unless there is clarity soon, the company would have to go ahead with payment in euros for May delivery or risk breaching the contract, the source added.

EU energy ministers are due to meet on Monday to discuss the situation, which has divided member states.

Russia’s Gazprom (GAZP.MM) cut off gas supplies to Bulgaria and Poland on Wednesday after they refused to pay in rubles, and threatened to do the same to others.

On Thursday, Germany’s Uniper (UN01.DE) told the Rheinische Post newspaper that it would transfer Russian gas payments to a Russian bank and no longer to a European-based bank.

Eni, 30% controlled by the state, is one of the largest buyers of Russian gas in Europe with long-term contracts that expire in 2035. Last year it imported some 30 billion cubic meters of gas from Gazprom.

A source in Prime Minister Mario Draghi’s office said Italy was waiting for the European Union to come up with a common position.

The European Commission said last week that if buyers of Russian gas confirmed payment was complete once they had deposited euros, as opposed to later when euros had been converted to rubles, that would not breach sanctions.

Another source said Italy still had time as Eni’s next round of payments for May gas supplies is due after the middle of the month.

Eni and the government declined to comment.

Italy gets about 40% of its imported gas from Russia and has been looking to diversify its energy sources since the invasion of Ukraine in late February.

Eni CEO Claudio Descalzi traveled with Italian ministers to producing countries, including Algeria, Angola and the Republic of Congo, to secure alternative supplies.

Information from Stephen Jewkes; edited by barbara lewis

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